Zuma’s pain as mine strike hopes dashed

Wednesday, June 18, 2014 - 02:36

June 18 - It's lost its crown as Africa's top economy but platinum strikes do look like they are about to end. Hayley Platt looks at South Africa's prospects after President Zuma's state of the nation address.

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There was plenty of pomp and ceremony as South Africa's President gave his state of the nation address.
And Jacob Zuma was keen to reflect a similar all guns blazing approach to re-igniting an economy that has been weak now for almost three years.
(SOUNDBITE) (English) PRESIDENT OF SOUTH AFRICA JACOB ZUMA SAYING:
"We have set a growth target of 5 per cent by 2019. To achieve this, we will embark on various measures and interventions to jump-start the economy."
He blamed the five-month-long strikes in the platinum sector and the global economic slowdown for recent weakness.
Growth was just 1.9% last year and Standard and Poor's has just downgraded the country's credit rating.
Nigeria - not South Africa - is now the continent's biggest economy
(SOUNDBITE) (English) PRESIDENT OF SOUTH AFRICA JACOB ZUMA SAYING,
"The low level of investments is a key constraint to economic growth. We are determined to work with the private sector to remove obstacles to investment."
New spending figures offered some encouragement - up almost 3% for the start of this year compared with a near 4% fall at the end of last year.
But household spending slowed, with many consumers having less cash due to the mining strikes.
An end to the industrial action had been looking likely.
But the companies now say they can't meet the unions demands and more talks are needed.
So does South Africa really stand any chance of achieving 5 percent growth?
Economist Christian Shulz from Berenberg Bank says it has some payment balance issues to address first.
SOUNDBITE: Dr. Christian Schulz, chief economist, Berenberg, saying (English):
"South Africa needs structural reforms, it needs to become a more stable, political place and become a society much more open to Foreign Direct Investment that could in the long run lead to rebalancing of the current account and thus less vulnerability to fluctuations elsewhere."
The address was the 72-year-old President's first public appearance since he was hospitalized for two days earlier this month.
He'd been suffering from exhaustion after elections in May.
With unemployment at 25% and widespread poverty his economy perhaps needs a similar tonic.
But he doesn't specify exactly what medicine he's prescribing and that could be the fly in the ointment.

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